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CGT on Primary Residence that is being split

We bought our home 20 years ago.
7 Years ago we developed an outbuilding and have been renting that out.
We have continued to live in the main house.

We are trying to understand our CGT liability should we wish to formally split the property and sell the main house.

Does the CGT liability occur when we split the property or when we sell the main house?
What reliefs would be entitled to?
We intend to move into the outbuilding on sale of the main house, could this affect the calculation/reduce our liability?

Comment

So if we assume the gain on the outbuilding is 300K over 20 years.
We can offset the redevelopment costs, offset PPR and offset Lettings relief?
Redevelopment cost: 50K
PPR: 250K * (13/20) = -162.5
Lettings Relief: 250K * (7/20) = -87.K so 40K max.
Would leave a CGT of 47.5 * 0.28 = 13.3K
Can we then use both our CGT allowances to cancel out that out and pay nothing?

Comment

It's all on the same title at present, but the outbuilding is not attached to the main building.

You should take some proper tax advice, as it's not something I've come across before, but which must have happened before)

Why do we think there would be any CGT at all.
You've been renting part of your residence (which might be more than one building, but it's all one property).
You've paid to improve it and it's increased in value, but you haven't yet created a new property.

But unless the outbuilding is larger than the main house, separated from it by a road, waterway or fence/wall it should be within the curtillage of the house - and, therefore, is simply a subsidiary part of it.

When you did the conversion, presumably it was done under permitted development for the main house (which should include the outbuilding)?
If it needed planning permission, that permission would confirm whether what was being constructed was a new property or a change to the current property.

When you actually split the property, I think that would be a tax event (with no CGT because there's no CGT on your primary residence.)
From that point, the property you aren't living in starts a taxable gain.

Again, don't crack open the champagne without getting this confirmed - there may very well be tax regulations I've never come across relating to this.

When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

Comment

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